Business loan applications are quite a bit more complicated than the average personal credit or loan product. There are numerous factors that a lender needs to consider before they make the decision to approve a business loan, and the information you need to supply is very different to a personal application.
So you’re ready to apply for a business loan. All you need to do is fill in a form, right? If only it were that easy!
The secret to getting approval is a strong lending proposal
Your lending proposal is a collection of information and documents that tells a potential lender about your business and its financial position in detail. It also provides you with the opportunity to communicate the best possible position in favour of getting the funding you need.
A strong lending proposal will give a lender everything they need to make a considered decision. If you give lenders everything they need in a format that they can understand, then that decision becomes a lot easier for them to make. Miss out important information or don’t highlight the right information is a sure fire way to getting the application declined.
What goes into your Lending Proposal?
Getting a positive outcome all comes down to information – nothing happens without it.
Your application will require all of the following:
- Loan Purpose – An outline of the underlying reason/s for the loan.
- Business History – Details about your business age, industry and principles.
- Management Team – Key staff and business systems in place.
- Sales and Business Model – Information about your industry and customers.
- Financials – Profit/Loss, Balance and Cash flow sheets.
- Lending Analysis – Overview of strengths and weaknesses.
- Existing and Proposed Debt – A debt summary, including all personal debt.
- Formal Application – The official application paperwork.
Lenders want to support businesses that do well, because it could lead to even more business with them in the future. Don’t give them a reason to turn your application down – it should be completely transparent and clarify any anomalies.
Don’t know where to start? Read more about the contents of a lending proposal, starting with the Loan Purpose.
Want some help? Our experienced relationship managers know the lending process inside out. They will help you put together a proposal that the banks just can’t say no to: let’s get started.